Rent Control Bill Heads to California Governor’s Desk

(CN) – A California bill that limits the amount landlords can raise annual rent is headed for Gov. Gavin Newsom’s desk after the California Assembly voted in favor of it on Wednesday.

The Assembly approved Assembly Bill 1482, authored by David Chiu, D-San Francisco, by a final tally of 46-22 one day after the Senate passed it with a similar ration.

Newsom has long indicated he intends to sign the bill and called it “the strongest [rent control] package in America” on Wednesday.

“These anti-gouging and eviction protections will help families afford to keep a roof over their heads, and they will provide California with important new tools to combat our state’s broader housing and affordability crisis,” he said in a statement after the vote.

The rent control legislation caps the amount landlords can raise rent by 5% annually while enshrining tenant protections that prevent landlords from evicting occupants with profit in mind.

Gov. Gavin Newsom signs one of the budget trailer bills at Sacramento City College in Sacramento, Calif., Monday, July 1, 2019. (AP Photo/Rich Pedroncelli)

But many of the Republicans and a handful of Democrats have criticized the legislation, saying it will affect rent prices in the Golden State in a manner opposite of its intention.

“It will reduce supply,” said Assemblymember James Gallagher, R-Nicolaus.

California boasts some of the highest rents in the nation, particularly in metropolitan areas like San Francisco, Los Angeles and San Jose. In what many deem an affordability crisis, individuals and families struggle to pay rent and in the worst cases are rendered homeless despite having full-time work.

While policy wonks like those who work at Terner Center for Housing Innovation at UC Berkeley agree that rent increase caps and tenant protections are part of the solutions, they also recognize the largest problem for California is the short supply and high demand for housing.

Many on the Republican side of the aisle argue that bills like AB1482 actually discourage prospective housing developers, meaning supply will continue to remain low.

Proponents of the bill point to analysis that says these modest protections for tenants will not discourage development and will help tenants whose current position is made precarious by the vagaries of the housing market.

“This is not a rent control bill, but an anti-price gouging bill,” said Assemblymember Buffy Wicks, D-Oakland.

The bill has also earned the endorsement of some business groups like the California Business Roundtable.

“AB 1482 modernizes our current policy to provide certainty to both renters and developers during our ongoing housing crisis,” said Roundtable President Rob Lapsley in a statement issued Wednesday after the vote.

The bill also ties allowed increases to the Consumer Price Index, which rises an average of 2.5% annually. If the CPI rises by its average, a landlord could only raise prices by 7.5%.

The legislation also contains just-cause protections for tenants, meaning they cannot be evicted for any reason by fickle landlords looking to cash in. Those protections only apply to tenants who have occupied a qualified rental unit for at least a year.

The law contains a sunset clause for 2030, at which time the rental landscape can be revisited.